China property stocks down on Chongqing tax

Chinese property stocks are mostly down Monday after Xinhua News Agency reported that Chongqing municipality will start collecting real-estate tax on high-end residential property in the first quarter.

CC Land Holdings Ltd., whose portfolio is heavily concentrated in Chongqing, is down 1.89% at midday, recouping some of its losses from the morning. Fears that the measure could spread to other parts of China, particularly Shanghai, are dragging down other developers. Neo-China Land Group (Holdings) Ltd. is down 3.24%, Glorious Property Holdings Ltd. 1.74% and Agile Property Holdings Ltd. 1.65%. The broader Hang Seng Index is flat.

“The precise impact will depend upon the scope of the levy, which we believe will turn out to be much narrower than originally thought,” says UOB KayHian, the brokerage arm of Singapore’s United Overseas Bank Ltd. The ultimate aim of the property tax is to enhance the recurrent revenue base for local governments, though it has been misinterpreted as a major policy weapon, it adds.

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